This screenshot shows one way Google will place ads in games, including casual Web-based games like PlayFish's Wordplay.
Google

If Google's entry into a field of advertising doesn't legitimize it, nothing can. And that's why the in-game advertising industry just got a huge shot in the arm.

On Tuesday night, Google announced the beta launch of its new AdSense for Games program, the search giant's first foray into the video games market, and the long-awaited answer to the question of what the company planned to do with AdScape Media, which it bought for $23 million in February 2007.

According to Christian Oestlien, the senior product manager for AdSense for Games, the program's beta launch will focus on the placement of a variety of forms of ads in Flash-based casual games and some larger titles.

In the beginning at least, Oestlien said, Google will work with partners like PlayFish, Mochi Media, Demand Media and Konami.

The latter, Oestlien said, would use AdSense for Games to place ads in well-known titles like Frogger and Dance Dance Revolution.

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And among the initial advertisers participating in the program are eSurance, Sprint, and Sony Pictures Entertainment.

Of course, the in-game advertising field already has several well-established players, including Microsoft's Massive, DoubleFusion, and IGA.

"By (Google) finally launching in the space," said DoubleFusion CEO Jonathan Epstein, "it confirms for all parties...that this space is of interest to one of the largest media companies in the world. Google does not enter into markets that don't have billion dollar-plus potential for them."

To Epstein, having Google plant its flag in the in-game ads space shows everyone that games cannot be taken lightly as an ad platform, no matter what other choices advertisers have for their dollars.

"The battleground here is not between ourselves and Massive and Google," Epstein said. "It's getting games their rightful share of the ad dollars, as opposed to TV, print, and (traditional) online ads."

For its part, Google is well aware that it will have several significant competitors, but still thinks it can set itself apart.

According to Oestlien, Google intends to do so by leveraging its network of thousands of advertiser partners, as well as its proven experience helping those partners with the placement of effective print, image- and Flash-based creative ads.

Google's long-term play
Given that Google announced its AdScape buy more than a year ago, Google's move is by no means a surprise. Some see that it's only natural that the company seeks to repeat the success it has had with AdSense in as many new environments as possible.

And some think that while Google may have its work cut out for it in the games space in the short-term, the AdSense for Games move is really part of a long-term play involving several different media.

"I would argue that Google is not going to be a home run in in-game advertising...any time in the immediate future," said Tim Hanlon, executive vice president of Publicis Groupe's media futures practice, Denuo. "But pay careful attention, (it is trying to build the) foundational building blocks to be an ad server in many environments that could be very attractive to marketers and ad agencies, and I think the place where Google will be successful soonest is in the self-serve marketplace, or the long-tail marketer environment."

"Google does not enter into markets that don't have billion dollar-plus potential for them."

--Jonathan Epstein, CEO, DoubleFusion

Hanlon explained he thinks Google is uniquely positioned to help small, "mom and pop" marketing companies get into media formerly dominated by major advertisers. And games could present just such a golden opportunity for these moms and pops, he said.

"In the short term, this is interesting, but not earth-shaking," Hanlon said. "But in the long term, it's yet another step towards Google ubiquity in ad serving."

For now, Google is not saying exactly what its plans are, but it did say that it plans to bring in revenues through both impressions and click-through models.

To Dorian Benkoil, the founder of Teeming Media, an online business consultancy, Google's success at placing in-game ads, like that of its competitors, will come down to how well it is able to integrate those messages in games.

"What I've seen," said Benkoil," is that the community of gamers tend to be very vocal and emotional about anything that they find that isn't well integrated into a game. So if Google is doing an AdSense initiative, I would hope that they would do it in a seamless way that isn't interruptive of the gaming experience. Because if not, they would face some backlash."

Benkoil said that his research has also indicated that in-game ads may not be as effective as those in other media. That's because, he suggested, gamers spend a lot of time on the sites and in the games where they play, but they are deeply engaged in what they're doing and are not very interested in looking at things, like ads, that may be a distraction.

That dynamic, he added, could be a problem for Google if it focuses too much on the click-through model.

Another question Google will have to find the answer to is how gamers feel about ads in the first place.

For years, there have been studies showing that gamers actually like ads because it makes their playing experience more realistic, given that there's advertising everywhere we go in real life.

Smart ad placement is key
Whether that's generally true or not, Benkoil said the key is how smart the placement of any ads are in games.

"Ads have to be well-integrated into the game," he said, "and usually when they are well-integrated, it's been very carefully done, and the gaming company works very carefully to integrate the advertising message."

Without knowing any specifics of Google's plans, Benkoil said this could pose a problem for the company, since it is known for automated algorithms that place ads, and he said it would be hard to imagine how carefully those ads could be positioned.

"But if they're able to pull that off in an automated sense," he added, "then they've gone to a new generation of in-game advertising."

For now, with financial markets the world over struggling, some may question whether it's a good idea for Google to be diving into a new advertising medium, but Oestlien doesn't see the economic downturn as much of a problem for the AdSense for Games program.

"Given the current economic situation, we think providing a model that reinforces games," Oestlien said, "is a great thing for Google to be able to do. Games are a pretty resilient part of the economy, and game playing continues to grow."

Either way, given that Google paid $23 million for AdScape, it had to launch its in-game ads program sooner or later. And that's good for the industry, even its competitors insist.

"This is nothing that wasn't expected," said Epstein. "It was a question of when. (And) it's another voice saying the TV buy is outdated and (Google's) is a powerful voice in this argument."